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In its first-quarter results, LVMH’s Selective Retailing unit was the French conglomerate’s brightest spot. Sales rose 11 percent on an organic basis, with “remarkable growth” at Sephora cited. Overall sales for LVMH rose 3 percent, indicating that fears that luxury demand was cooling in step with economic growth were well-founded.
Sephora’s store network expanded in the last quarter, particularly in the US, though growth was also noted in Europe and the Middle East. Within the Selective Retailing division, the company’s duty free business is still trading below its pre-Covid level of activity, which LVMH chalked up to the slow resurgence of international travel to flagship locations in Hong Kong and Macau.
Perfumes and cosmetics also grew 7 percent, with fragrances a continued champion. LVMH noted the strong performance of Dior perfumes, many of which are hero products such as Sauvage, J’Adore and Miss Dior. The viral popularity of Maison Francis Kurkdjian’s Baccarat Rouge 540 was another boost. Skincare and cosmetics from Guerlain and Dior also contributed to growth.
The division’s resilience may be a balm for the beauty industry, which has been on unsteady ground since executives at Ulta Beauty signalled demand across prestige and mass was softening in March. The news that it expected its first-quarter results at the lower end of its guidance caused a rout on Ulta Beauty’s stocks, with a wider drop for other beauty firms including E.l.f. Beauty and Coty.
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Ulta Sparks Rout in Beauty Stocks on Warning of Slowing Demand
The company’s stock plunged as much as 15 percent, the most it has tumbled since March 2020.
Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.
